Mike Stagg LIVE: Louisiana Coastal Plan

Friday, 06 July 2012 12:16
Last week: Obamacare, Soaring costs and Louisiana losts
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John Roberts, Chief Justice of the United States, confused me (and many others) greatly in rendering his obtuse majority decision upholding the individual mandate in the court's Affordable Care Act decision. Roberts began his majority decision by adamantly proclaiming that the Commerce Clause of the U.S. Constitution could not be used to "compel" commerce by forcing citizens to purchase health insurance against their wills. He then went on to allow the purchase of health insurance to be "compelled" by vesting it in Congress's authority to tax. If compelling commerce in order to regulate it is unconstitutional, what difference does it make if it is blessed by the Commerce Clause or the power to tax?


Some 20 years ago, slightly more than 3 million workers were on Social Security Disability Insurance (SSDI.) Today, over 8 million are drawing those benefits. SSDI was created to enable workers paying into the Social Security system to draw early benefits if they are incapacitated by illness or injury before they reached retirement age. In economic downturns it is predictable that Unemployment Insurance (U.I.) claims will skyrocket. U. I. benefits (paid entirely by employers with not a dime coming from covered workers) are designed to tide unemployed workers over for a limited period of time until the job market improves. The current economic downturn has lasted almost four years. The federal government has expanded and extended U.I. coverage for up to 99 weeks. As that coverage time period began to run out, some unemployed workers began taping the Social Security Disability Fund to continue receiving government payments. This trend puts more stress on the Social Security system and hastens its date with bankruptcy, but the federal stewards of the Social Security system continue to allow these abuses to occur.


The highly reputable Tax Foundation recently released data showing that Louisiana ranked second in the nation in state spending per capita for the 2000-2010 time interval (a 64 percent increase topped only by Oklahoma). This data was released at a time when a budget fashioned with extensive use of one-time revenues limped out of the Louisiana Legislature and recipients of government funding are rallying around the cry of increasing taxes (calling it "tax exemption reform”). Our state government fueled this record spending increase by budgeting volatile revenues for recurring purposes by: blowing through skyrocketing oil and gas revenues for much of the last decade; spending enormous sums of federal hurricane relief dollars, coupled with taxes generated from a huge influx of storm-related insurance payments; benefitting from hundreds of millions of extra general fund dollars when the Budget Stabilization Fund was filled to its maximum limit, allowing volatile oil and gas revenues to pour unrestricted into the state general fund; appropriating close to $500 million when the state's Budget Stabilization ("Rainy Day") Fund was tapped on numerous occasions; and plugging billions of dollars from non-recurring federal "stimulus" money into the budget. Now some in the Legislature want to continue the excessive spending by raising more tax revenue from the private sector to continue unsustainable levels of state government appropriations. Their attempts to increase taxes will be strongly opposed.


The manufacturing segment of the economy has been the bell cow trying to lead the U.S. out of its economic doldrums. The recent drop in manufacturing activity—closely tied to the contraction of the European and Chinese economies—is not a good sign for the national economic outlook. The weak dollar and astounding recent productivity increases among U.S. manufacturers should be the catalysts needed to spur manufacturing forward and with it much of our domestic economy. Unfortunately, the specter of rising health care and pension costs; the "Taxmaggedeon" cliff approaching on January 1; huge potential defense cuts; overregulation of the energy sector; and the federal government's attempts to tilt labor-management relations exclusively toward the benefit of unions continue to dampen the full potential of a manufacturing renaissance in the U.S. The November elections will go a long way toward deciding whether economic growth or government growth will be dominant for the next four years and beyond.

Dan Juneau is President and CEO of the Louisiana Association of Business and Industry (LABI)

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